Comment: The spiralling cost of no-win no-fee lawyers

The Department of Health has failed to stem the soaring cost to the NHS of
no-win no-fee lawyers, writes Steve Barclay MP.

Photo: GETTY

7:30AM BST 25 Jun 2012

Earlier this year it was revealed the costs of clinical negligence claims to the NHS had risen by £10billion in the last five years to total over £16.6billion. However, the Department of Health had failed to understand why, let alone act.

As a Member of the Public Accounts Committee I have become accustomed to departments being slow to act when costs rise. However, as clinical negligence liability now amounts to 15% of the government’s liabilities according to the National Audit Office, getting a grip on this area must be a priority.

It is important that individuals who are damaged as a result of negligent clinical treatment are adequately compensated. Because of developments in medicine care costs are likely to increase in some areas. People survive longer with severe conditions, and more advanced equipment is available which is expensive to buy and frequently needs to be replaced. For example it is not unusual to settle catastrophic injury claims for £6 million now compared to £3.5/4 million a few years ago.

However, this does not account for the massive increase in liability. One third of the money paid out by the NHS Litigation Authority goes to lawyers. In many cases these far outweigh any settlement paid to the claimant. For example, in one of the worst cases costs spiralled to almost £93,000 whilst the claimant only got £2,000. Of course not all cases are like this, but it brings the challenge in to sharp focus.

Much of this problem has been driven by ‘no win, no fee’ lawyers. They have been increasing fees to cover those cases they lose as well as adding on extra costs, known as ‘success fees’ when they win.

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I am pleased that the Government is starting to take action on this. The recent Legal Aid Sentencing and Punishment of Offenders Act will abolish the recoverability of such extra fees and cap the percentage of a claimant’s damages a lawyer can take. This will give a strong incentive to keep costs proportionate to the case.

However, whilst this is welcome lawyers will still have an incentive to increase the length of cases to push up costs. One way in which they may do this is trying to get cases heard in more senior courts and not make use of the small claims track, which sees small cases dealt with more efficiently.

The Department of Health also needs to understand why not only the value of claims, but the number of claims has increased. In the last 5 years they have gone up by over 56%. This is not just a value for money issue. Some of the rise may be due to lawyers, but it is a worrying reflection on the ability of the NHS to learn as an organisation from its mistakes.

The best way to reduce clinical negligence liabilities in the NHS is to not only crack down on high claimant lawyers fees, but to prevent incidents in the first place. A greater focus on benchmarking and performance management across the NHS is overdue. It is not just money at stake, but medical safety too.